Chesapeake (CHK) Shares Drop as Land Price-Fixing Scheme Uncovered (ECA)
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If he hasn't already, Chesapeake Energy (NYSE: CHK) founder and CEO Aubrey McClendon should really consider cancelling his Reuters account.
According to a new report out of the news service, McClendon's Chesapeake is said to have colluded with its top competitor, Encana Corp. (NYSE: ECA), to suppress land prices in nat gas and oil-rich plays.
Emails exchanged between McClendon and an executive at Chesapeake showed the company was looking to work with Encana over land grab instead of bidding each other up. Several private deals with homeowners in the area were also mentioned.
The discussions are a huge red flag. In the U.S., private cartels are forbidden under the Sherman Antitrust Act. Under the Act, companies can be fined up to $100 million and individuals up to $1 million apiece, not to mention years of jail time.
The companies have said they mulled a joint venture, but nothing ever gelled. Despite this, antitrust counsel said simply being in talks would be enough for action, noting that nothing would have come from a deal aside from keeping land prices low.
Shares of Chesapeake are down about 8 percent on the session. EnCana shares are down more than 5 percent.
According to a new report out of the news service, McClendon's Chesapeake is said to have colluded with its top competitor, Encana Corp. (NYSE: ECA), to suppress land prices in nat gas and oil-rich plays.
Emails exchanged between McClendon and an executive at Chesapeake showed the company was looking to work with Encana over land grab instead of bidding each other up. Several private deals with homeowners in the area were also mentioned.
The discussions are a huge red flag. In the U.S., private cartels are forbidden under the Sherman Antitrust Act. Under the Act, companies can be fined up to $100 million and individuals up to $1 million apiece, not to mention years of jail time.
The companies have said they mulled a joint venture, but nothing ever gelled. Despite this, antitrust counsel said simply being in talks would be enough for action, noting that nothing would have come from a deal aside from keeping land prices low.
Shares of Chesapeake are down about 8 percent on the session. EnCana shares are down more than 5 percent.
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